| Abstract | This paper would demonstrate the rationality of China’s PPP data in 2005 released by World Bank and respond many disputes over this result from international community. It explains the Penn Effect of the price level of China using Balassa-Samuelson effect, analyzes the price differences between urban and rural areas, between various types of products, and their influence on PPP based on a lot of statistics. The study shows that there is the obvious Penn Effect in China PPP data. In recent years China PPP and price level are rising sharply, in line with the actual situation in fast economic growth. The statistics also suggest the small domestic Penn Effect. The product and area samplings have limited impact on the PPP because of the little gaps of consumer prices between regions, rural and urban areas. The change trend of China’s PPPs data estimated by World Bank has its rationality in some extent. |